Coronavirus: How to handle stamp duty during the outbreak

Prior to COVID-19, HMRC applied stamp duty by physically stamping instruments of transfer (such as Stock transfer forms or “STFs”) delivered to the Stamp Office in Birmingham. Given social distancing, their practice has been rapidly overhauled to (mostly) work by email, but companies will need to tidy up loose ends from the changes once the COVID-19 crisis ends.

How do I get the Stamp Office to stamp documents?

HMRC’s Stamp Office isn’t stamping posted instruments – instruments should be sent by email to [email protected] with the usual supporting information and documents. Payment must also be made electronically rather than by cheque – HMRC gives details here, including the payment reference to include. Stamp duty reserve tax (SDRT) payments must also be made electronically during the COVID-19 outbreak.

Given social distancing measures, HMRC is accepting electronic signatures (rather than “wet ink” signatures) on instruments while this measure is in place. Those unable to get forms or instruments signed and dated, or unable to make electronic payments, should email HMRC.

What if I need to send the Stamp Office something more complex?

HMRC haven’t finalised all of the details, but the practice above should broadly apply to more complex stamp duty submissions such as:

  1. applications for group relief
  2. requesting HMRC to confirm the instrument of transfer on a takeover by court-ordered scheme of arrangement
  3. submission for final stamping and “truing-up” stamp duty where HMRC’s ‘wait and see’  practice applied in the past (eg where the final figure wasn’t known pending a completion accounts adjustment). In these cases, final stamping will be delayed, but we recommend telling HMRC about the true-up and paying promptly to limit interest and penalties.

In each case, the submission should be submitted with electronic copies of the usual application documents.

What if I have sent the documents by post already?

You should consider resubmitting them electronically (providing details of any payments already made) or they will not be reviewed until after the COVID-19 crisis.

What should I do once I hear back from the Stamp Office?

HMRC should email back a letter confirming receipt of the payment, giving details of the transactions and their reference codes and giving assurance that they will not pursue the company registrar for registering the new ownership of shares (as it would usually be an offence under the Stamp Act to register an instrument that hadn’t been physically stamped).

HMRC’s letter should be sent to the company registrar, together with a copy of the stock transfer form and share certificate for them to register the transfer in the company’s books. For a scheme of arrangement, Companies House should accept and register court orders accompanied by the letter from HMRC.

When you hear back – some points to watch out for

HMRC’s response should protect company registrars from the Stamp Act offence, but it doesn’t solve all issues. If your company has non-standard articles of association or other constitutional documents you should check that these do not expressly required the original STF in order to register a transfer, and have them amended if necessary. 

In addition, company registrars often rely on signed and stamped hard copies of the instruments of transfer to establish it is valid and enter it in their books. The registrar will need to get comfortable that each transfer is genuine and permitted by the statutory requirements in the Companies Act 2006, especially given the risk of COVID-19 related fraud.

The above gives a high level guide to the issues you’ll need to consider. For anything more complex, our team of tax specialists can help.

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